50Hertz balance sheet press conference
2013: large investments
boost infrastructure development
Balance sheet press conference
Berlin, 12/03/2014
Boris Schucht, CEO; Udo Giegerich, CFO
12 March 2014 - 50Hertz balance sheet press conference 2013
1 / 39
Agenda
Business development in 2013
Key company figures in 2013
Outlook
2
2 / 39
Business environment in 2013 (I)
1. Strong change of context in connection with high degree of uncertainty for all players
2. Fewer significant shortcomings in the regulatory framework over the past
three years -> prerequisite fulfilled for grid development financing
3. Good business results for 2013 characterised by non-recurrent effects
and improvement of the regulatory framework - net result within regulatory target range
4. Politics: federal government has addressed important themes, Federal Requirement
Plan Act adopted through transparent procedure by Bundestag and Bundesrat, grid
development plans and scenario framework consulted often and at an early stage by
the public
3 / 39
Business environment in 2013 (II)
5. Close cooperation with NGOs (example: Renewables Grid Initiative) as well as
better information and dialogue in the grid expansion regions
 Early information and high degree of public participation
 Grid development only to the degree required
 Minimise effects of new grids on man and nature
Grid development is the key to the success of the energy
transition
4 / 39
Grid development projects
are picking up speed *
Vierraden – Krajnik
operational
2 km
2
Northern Hamburg-Schwerin
operational
65 km
3
South-West Interconnector 1 Lauchstädt-Vieselbach
operational
76 km
High-temperature conductor Remptendorf-Redwitz
operational
18 km
Baltic 1
operational
75 km
Grid connection substation Altentreptow Nord
operational
1 km
Capacity increase substation Perleberg
operational
2 km
Conversion from 220 to 380 kV lines:
Ragow-Thyrow and Ragow-Wustermark
operational
3 km
Conversion of Eula-Großdalzig line
for the Schleenhain mine
operational
6 km
10
Grid connection substation Stendal West
operational
1 km
11
South-West Interconnector 2 Vieselbach-Altenfeld
under construction
57 km
12
Grid connection substation Förderstedt
under construction
12 km
13
380 kV overhead line Bärwalde-Schmölln
under construction
46 km
14
New construction works at substation Wolmirstedt
under construction
6 km
15
Baltic 2
under construction
120 km
16
3rd interconnector to Poland
spatial planning procedure ongoing
~ 10 km
17
380 kV overhead line "Nordring Berlin"
planning approval procedure pending
~ 80 km
18
Uckermark line Neuenhagen-Bertikow
planning approval procedure ongoing
~ 120 km
19
Bertikow-Pasewalk
federal sector planning pending
20
Wolmirstedt-Perleberg
planning approval procedure pending
21
Offshore connections in the Baltic Sea
approval procedure ongoing
~ 70-90 km
22
Combined Grid Solution
approval procedure ongoing
~ 15 km
4
22
15
1
5
6
21
5
Completed
7
8
2
6
7
20 10
14
19 1
18
17
8
12
16
3
11
9
13
50Hertz investments
4
* Projects since 2009
2010 2011 2012 2013 2014
9
Taken into operation
Under construction
Approval pending
~ 45 km
~ 100 km
250 km
240 km
~ 450 km
5 / 39
2013: infrastructure development makes headway!
Systems under construction
Systems for which procedures are ongoing
•
•
•
Planning approval procedure
currently ongoing for third
section of South-West
Interconnector between
Altenfeld and the
Thuringia/Bavaria state border
Start of the regional dialogue on
the South-East Direct Current
Passage in Thuringia und SaxonyAnhalt
Planning approval procedure
ongoing for Uckermark line and
spatial planning procedure
ongoing for 380 kV Nordring Berlin
Substations
•
•
•
•
•
9/2013: Connection of the most
powerful wind farm of MecklenburgWestern Pomerania to the 50Hertz
grid at the new substation
Altentreptow-Nord
Wind farm with 140 MW capacity
has its own hydrogen storage unit
Expansion of Perleberg substation
with third transformer, fourth
transformer planned for 2014
Project Bärwalde-Schmölln,
construction starts August 2013,
construction of new line during
operation of existing line, no
acceptance issues
Second section of South-West
Interconnector between Vieselbach
and Altenfeld
6
6 / 39
Development of offshore projects in the Baltic Sea
2011: commissioning of Baltic 1
2012: start of construction on Baltic 2
2014: connection of Baltic 2 to the grid
shortly before completion
2014: hand-over to wind farm operators
in the Westlich Adlergrund region
potential of offshore wind power (Baltic
Sea): approx. 5,000 MW
Reduced offshore targets reconcilable with potentials and
consistent expansion in the Baltic Sea.
7 / 39
Information, dialogue and participation are of the
utmost
importance...
Increasing acceptance
Local dialogue
- Dialogue with citizens
for important
decisions and
requests
High degree of transparency
at an early stage
- Process for grid
development plan
- Publication of
load flow data
- Joint search
for optimal
solutions
Participation and
partnership
- RGI – European
partnership (for
grid development)
- Consultations (GDP, ...)
- Project-related
partnerships
8 / 39
... and 50Hertz is striking out upon new paths
Information material
Mobile information office
Discussion meetings, information fairs,
workshops
Internet sites on grid development projects
9 / 39
Milestones in European market development
Load flow control
Participation in energy
exchanges
 In the course of 2013,
50Hertz acquired
shares in the EEX
worth 2.25% preemption rights for a
share of 4.3 % were
exercised
 1/2013: first use
of the "virtual phase shifter"
for better load flow control
between Germany and Poland
 The goal is to offer
even stronger support
for the further
development of the
electricity exchange
market
 Agreement made with Poland
and the Czech Republic on
the installation of physical
phase shifters
Market coupling
- Successful launch of the single
European Price Couplings
(EPC) in daily spot trading in
North West Europe (NWE),
step-by-step expansion to other
regions
- Project on the introduction of
the EPC in the intraday spot
trading
- Project on the introduction of
the load-flow based market
coupling in Central East Europe
(CEE)
- Marketing the 50Hertz
interconnectors
• in NWE by
• and in CEE by
10 / 39
50Hertz as an employer with social responsibility
Fair Company
 50Hertz joined the Fair
Company initiative that
was
launched
by
karriere.de in 2004.
 The goal of this initiative
is to support fair working
conditions for trainees
and career starters.
FOCUS ranking
 50Hertz is ranked first
employer in its field of
industry.
 A study by Focus
magazine
in
cooperation with Xing
asked nearly 20,000
employees
how
satisfied they were
about their employer.
Commendation by UNESCO
 50Hertz's interactive
exhibition "Turning around
energy together" for
schools is commended by
German UNESCO
Commission
 The exhibition should
promote the energy
transition and sustainable
thinking and acting to
children and adults.
11
11 / 39
Renewable energy sources in the 50Hertz grid area
Installed
capacity in MW
30.000
Sonstige EE
Biomasse
Wind
21,915
22,727
2012
2013 *
35,0
36,7
2012
2013 *
18,008
20.000
11,304
13,395
15,101
10.000
0
2008
2009
2010
2011
40
30
Feed-in in
TWh
Photovoltaik
22,8
23,7
24,8
2008
2009
2010
28,2
20
10
0
2011
RES are in constant development in the 50Hertz area. Power generation from these
sources accounted for about 37.4% (36.7 TWh) of power consumed in 2013.
* temporary values, verified values for 2013 will be available in June 2014; source: netztransparenz.de
12 / 39
Line load in the 50Hertz grid area
unsynchronised line load > 5h/y
2009
____
____
2013
capacity used ≤ 50%
50% < capacity used <
70%
____
____
capacity used ≥ 70%
no values
The grid load increases dramatically due to the changes in the power generation sector.
13 / 39
System security: solar forecast for April 2013
GW
Dramatic forecast errors of up to 8800 MW in the day-ahead forecast
Intraday forecasts clearly better in comparison, closer match with actual
feed-in
Control and reserve power exhausted in Germany
20
15
Day-ahead forecast
Final Intraday forecast
Real-time estimate
Open positions 50Hertz
10
5
0
3. Apr.
4. Apr.
5. Apr.
6. Apr.
The integration of renewable energy sources is a big
challenge for system management!
14
14 / 39
System security: interventions in grid and market
Power volumes and costs for redispatch (§13.1 EnWG)
4500
4000
140
Quantity in
GWh
Costs in million €
120
3500
100
3000
2500
80
2000
60
1500
40
1000
20
500
0
2009
2010
2011
2012
2013
0
Less redispatch because of relatively little wind this year and
infrastructure development (Northern Line, Thuringian grid
reinforcement).
2009
2010
2011
2012
2013
TenneT redispatch towards 50Hertz
International redispatch
National redispatch 50Hertz grid area
Situation on: 31/12/2013, temporary
values
15 / 39
System security: interventions in grid and market
Power volumes and costs to reduce wind turbine output (§13.2 EnWG /
§11 EEG)
160
14
Quantity in GWh
140
Costs in million €
12
120
10
100
8
80
6
60
4
40
2
20
0
2009
2010
2011
2012
2013
0
2009
2010
2011
2012
2013
Capping EEG peakloads within economically acceptable range
Situation on: 31/12/2013 *temporary values
16 / 39
Agenda
Key company figures in 2013
Outlook
17
17 / 39
Planned investment volumes realised in 2013
250
200
150
100
50
0
500
450
37
400
2008 2009 2010 2011 2012 2013
Instandhaltung
350
154
300
51
250
475
200
43
38
150
37
100
50
0
39
45
3
46
131
110
2008 2009 2010 2011 2012 2013
72
Offshore
248
114
107
105
114
2008
2009
2010
2011
144
40
Ø 20022007
0
Onshore
Offshore
250
200
150
100
50
0
2012
Instandhaltung
2013
Plan
Ø 20142023
250
200
150
100
50
0
2008 2009 2010 2011 2012 2013
Onshore
Grid development has visibly picked up speed. For next year's challenges
50Hertz is well equipped in terms of financial as well as human resources.
18 / 39
Clear increase in investment volume
Capex 2013: 402 million EUR
Categories
[+58.3% compared to 2012]
Investment in
process
improvement
Offshore 154 million
EUR
[+40.0% compared to
2012]
Replacement
investments
3%
6%
Investments in nonelectrical
installations
Integration of
renewable
2%
energy
sources
89%
154
(38.4%)
248
(61.6%)
Offshore 248
million EUR
[+72.2% compared to
2012]
Clear increase in investment volume in 2013. Largest share apportioned to the integration
of renewable energy sources and the development of the European electricity market.
19 / 39
HR
+8.5%
+9.1%
+7.1%
+4.7%
694
757
821
648
Full time equivalents
619
2009
2010
2011
2012
2013
Efficient recruiting to integrate renewables.
20 / 39
Net result*
18
24
14
166
110
Bereinigtes
Regulatorische Rückstellungen
Ergebnis 2013 Veränderungen (insb. Steuern)
IFRS
(t-2)
Operative
Einmaleffekte
Nettoergebnis
2013 IFRS
2013 result influenced strongly by positive one-off effects
* IFRS Eurogrid GmbH, 50Hertz Transmission GmbH and 50Hertz Offshore GmbH consolidated
21 / 39
Profit and loss statement*
2013
2012
Revenues (gross)
8,556
8,555
0.0%
Neutral business
Revenue from the grid business
7,664
7,710
-0.6%
892
845
5.6%
37
54
-31.5%
929
899
3.3%
-393
-409
-3.9%
-68
-64
6.3%
-165
-156
5.8%
EBITDA
303
270
12.2%
Depreciation and amortisation
-75
-75
0.0%
1
-29
n.a.
Taxes
-63
-55
14.5%
Net result
166
111
49.5%
in million €
Other income
Total of the proceeds and income
Energy and material costs
Personnel costs
Other costs
Financial result
∆
22 / 39
Balance sheet 2013*
Assets
in million €
2013
2012
∆
2,227
1,890
17.8%
Current assets
737
1,042
-29.3%
Cash
319
52
513.5%
3,283
2,984
10.0%
1,107
1,017
8.8%
Provisions
155
217
-28.6%
Long-term liabilities
523
524
-0.2%
1,190
1,093
8.9%
308
133
131.6%
3,283
2,984
10.0%
Equity ratio (=equity/total assets)
34%
34%
0
Debt/equity ratio (=Net financial debt/equity)
18%
46%
-28
Debt/equity ratio without EEG
14%
18%
-4
Fixed assets
Liabilities
Equity
Current liabilities
Regulatory liabilities (net)
23 / 39
Liquidity
Eurogrid GmbH, 50Hertz Transmission GmbH (incl. EEG), 50Hertz Offshore GmbH
Mio. €
500
400
300
200
100
0
-100
-200
-300
-400
-500
-600
-700
342
356
311
269
299
44
-45
-217
-486
12.2011
03.2012
TOTAL
06.2012
09.2012
EEG
12.2012
03.2013
TOTAL exkl. EEG
06.2013
09.2013
12.2013
saisonale Kreditlinien
für EEG
High need for financing in RES remains in 2013.
Remark: the negative balance in the overall liquidity is covered by short-term current account financing for a maximum of 150 million EUR.
Liquidity mentioned does not include accounts for which there is no power of disposition (e.g. consortium account)
24 / 39
Financial figures*
2013
2012
FFO interest cover
10.6
8.4
Net debt / Regulatory asset base
11%
41%
FFO / Net debt
68%
26%
0.2
0.6
RCF / Net debt
37%
19%
FFO
168
199
2,215
1,883
Net debt
249
778
RCF
92
144
Capex
405
253
Gross interest expense
18
27
Moody’s Rating
Baa1
Baa1
Outlook
stable
stable
RCF / Capex
Regulatory asset base
Moody's confirms stable
Baa1 rating of Eurogrid GmbH for third consecutive time.
* Figures based on IFRS and in accordance with the calculation schedule by Moody's Investors Service
25 / 39
Good long-term credit quality
180
2012
2013
120
161.1
109.2
140
115
110
120
Bond Index
Spreads vs EUR m/s (bps)
160
100
80
98.7
67.4
60
105
100
40
95
20
0
90
Jan Feb Mar Apr Mai Jun Jul Aug Sept Oct Nov Dec Jan Feb Mar Apr Mai Jun Jul Aug Sept Oct Nov Dec
Secondary Bond Performance*
EUROGRID GMBH MTN.10/20**
Eurogrid GmbH's credit quality is at a
constantly good level.
* EUROGRID GMBH MTN.10/20 3.875%; source: RBS/Bloomberg
** EUROGRID GMBH MTN.10/20 [WKN: A1EWR1, ISIN: XS0551935769]; source: Bloomberg
26 / 39
Agenda
Company figures 2013
Outlook
27
27 / 39
Quo vadis, energy transition?
A consensus should be reached on the energy
transition
Low degree of controllability of the RES expansion
and poor synchronisation with grid expansion
Energy transition
Fossil world
Costs of energy supply and efficiency
Profitability problem of conventional generation
Potential capacity problem in the future
28 / 39
Federal requirement plan for 2012 as legal
basis for need of grid development
Federal Requirement Plan Act
adopted by German Bundestag in
June 2013
- Basis: 2012 Grid Development
Plan of the TSOs
- 36 projects confirmed
- 3 HVDC corridors
- Current grid development plan
confirms federal requirement plan
- Federal Requirement Plan Act will
be amended in 2015 and 2018
29 / 39
The three HVDC corridors in the German power grid
- Wind farm connection in the north to a high-capacity
regional east-west grid (AC)
 Wind bus bar
- Integration of solar power in the south through
regional grid reinforcement (AC)
 Solar bus bar
- Integration of the guaranteed capacity through
conventional power plants in the west and east (AC)
 Bus bar "guaranteed capacity"
- Connection of bus bars
with HVDC lines
X
X
X
HVDC lines are optimised
addition to three phase current system
30 / 39
Outlook: what is essential to implement
the energy transition?
1. Stable legal and regulatory framework conditions are of the highest
priority for the realisation of the grid expansion
2. Broader consensus for grid development as the key for the energy transition
and political support at all levels required
3. Observing economic efficiency and avoiding and eliminating false
incentives (uniform grid fees, expanding deliverables)
4. Observing European framework - we are part of a European system
The German federal government has addressed and
is focussing on important and appropriate themes.
What is important now is their implementation.
31 / 39
Thank you very much
for your attention
Backup
33 / 39
50Hertz at a glance - late 2013
Value
(share in DE)
Surface area
109,360 km²
(31%)
Line length1
10,209 km
(~28%)
Maximum load
approx. 16 GW
(21%)
Power consumption
(based on electricity supplied to final
consumers in acc. with the EEG)
Installed capacity2:
- renewables
- wind power
approx. 98 TWh
(20%)
44.3 GW (~24%)
22.9 GW (~28%)
13.5 GW (~40%)
Workforce
Turnover
- grid
1 Installed
2
but not yet fully operational km
821
8.6 billion €
0.9 billion €
Source: 50Hertz, FNA, situation on 31/12/13
Temporary values, verified values for 2013 will be available in June 2014
34
34 / 39
Development of the electricity consumption in the 50Hertz control area
Power supplied to final consumers acc. to EEG
100
98,63 98,97
98
94,61 94,97
96
93,25
92,62
94
91,16 91,80
92
90
97,73 98,04
88,87
88
86
84
82
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Relatively constant electricity consumption in the 50Hertz control area
* Values excl. own consumption
35 / 39
Fluctuating feed-in of renewable energy - wind
power
50Hertz wind feed-in data for 2013
Wind feed-in (01/12/2013-07/12/2013)
11,064 MW
Minimum feed-in
0 MW
Greatest increase in 15 min.
Greatest decrease in 15 min.
1,431 MW
901 MW
12000
10000
Feed-in in MW
Maximum feed-in
8000
6000
4000
2000
Greatest difference between
min. and max. in a single day
9,675 MW
0
0
24
48
Prognose
72
96
Time in h
120
144
Hochtrechnung
cluster, upscaling (50Hz)
High demands on forecasts, system controllability and fast-response
system management
36 / 39
168
Fluctuating feed-in of renewable energy - solar
power
PV feed-in (01/06/2013-07/06/2013)
50Hertz solar feed-in data for 2013
Minimum feed-in
Greatest increase in 15 min.
Greatest decrease in 15 min.
5,346 MW
0 MW
1,594 MW
752 MW
Feed-in in MW
Maximum feed-in
5000
4000
3000
2000
1000
Greatest difference between
min. and max. in a single day
5,346 MW
0
0
24
48
Prognose
72
96
Time in h
120
144
168
cluster, upscaling
(50Hz)
High demands on forecasts
37 / 39
Operational challenge wind - XAVER
Wind direction and gust strength, 06/12/2013
00:00 hours
05:00 hours
12:00 hours
9730 MW
10187 MW
Feed-in: 9650 MW
Upscaling record for 50Hertz
06/12, 8 PM: 11,064 MW
Strong wind (11-17 m/s)
Storm (17-25 m/s)
Heavy storm (25-33 m/s)
Installed capacity: 13,488 MW (situation on 31/12)
Cyclone (>33m/s)
38 / 39
Very low failure rate at 50Hertz
Comparison of EHV failure rates of 50Hertz and other TSOs
for the years 2003-2013
Disturbances / 100 km of line length
3,0
Störquote 50Hertz
Störquote aller dt.
ÜNB
2,0
Mittelwert der
Störquote von
50Hertz
1,0
Mittelwert der
Störquote aller dt.
ÜNB
0,0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Year
39 / 39

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